Apple's Plan to Kill Spotify and Own the Music Industry

In what could be a major power grab by Apple, The New York Post and others
report that Apple is working on a subscription-based music service for
$10 to $15 per month. Apple currently dominates downloadable music sales
through its iTunes Store. Its entrance into music streaming could
further strengthen its clout in an industry struggling to find a business
model. Furthermore, the move seems to be in concert with efforts to
prevent Spotify, a hugely popular European streaming service, from
entering the North American market. As CNET reported Thursday, Apple is trying to convince music industry executives to blackball the free streaming service:

In meetings in Los Angeles recently, Apple executives told their music
industry counterparts that they had serious doubts about whether
Spotify's business model could ever generate significant revenues or
profits, according to two sources with knowledge of the discussions...
They noted that it's tough to sell something that someone else is giving
away, the sources said. One industry insider said it is only logical
that if Spotify were allowed to launch a free-music service here, at a
time when Nielsen recently reported that the growth of digital sales has
flattened out, it could eat into the businesses of proven
revenue-producers.

If Apple goes through with its subscription services, how could this affect Spotify and the music industry in general?

Apple
wants to launch a music subscription service with cloud access and they
don’t want Spotify to get in the way. They’ve probably been calling
some labels to tell them about Steve’s “better, more secure” plans, and
to remind them that, in the end, you can’t trust Europeans. That’s how
they roll: Steve Jobs saved the music industry. Labels owe him one. Even
though music downloads have slowed down over the last year, labels are
ready to believe in Jobs’ plan once again...

When it comes to
business it’s never about who’s wrong or right. Spotify is playing its
own game (or maybe they’re learning how to play in a new field) and
Apple wants to keep labels close, and competition far away from them.
The music industry has always been a huge mess, and now that tech
companies have joined the mess it has become an even more complicated
affair.

Spotify Could Still Break Through, writes Darrell Etherington
at Gigaom: "If Spotify is willing to pay big royalties for content up
front, chances are music labels will allow them entry into the market.
Rumors are circulating that Spotify will be part of Windows Phone 7 launch coming early next week. If it does come that soon, though, it’ll probably only offer a limited catalogue."

Record Labels Want Spotify to Charge Users, explains Jason Ankeny at Fierce Mobile Content: "While the majority of Spotify users tune in to a free, ad-supported version of the service, BusinessWeek reported
in mid-June that the four majors--Universal Music Group, Warner Music
Group, Sony Music Entertainment and EMI Music--want Spotify to follow
the lead of rivals like Rhapsody and eMusic by introducing premium
monthly subscriptions to U.S. consumers, enabling the music industry to
share in resulting revenues."

This Could Kill Rhapsody writes David Zax
at Fast Company: "Who stands to lose if Apple enters the subscription
music market? Rhapsody, for one. The leading subscription service now
offers streaming subscription plans for about $10 per month. With
Apple's vast iTunes user base--200 million of them, according to one
analyst and a $1 billion operation just to run--and its legions of
customers who are used to paying for music in its iTunes store, an Apple
subscription service could push Rhapsody to the margins. (We've reached
out to Rhapsody to learn their reaction to the reports, and will update
if we hear back.)"

Pricing Will Be Key, writes Jacqui Cheng
at Ars Technica writes: "The number being tossed around is $10 to $15
per month for the streaming subscription, though a number of details are
still left in the air, such as how much music users would be able to
access in a month, and for how long. If Apple followed the same model as
other subscription services out there, the answers to those questions
would be 'unlimited' and "until the subscription is canceled." There's
no guarantee it will play out that way, though, as Apple likes to do its
own thing."